Dynavax is one of the few biotech stocks under $10 that continues to attract attention from biotech investment specialists and more casual investors. Dynavax is one of the companies mentioned seriously in the race toward a vaccine for COVID-19. It also has a recent history of success in treatments for hepatitis B (Heplisav-B®) and autoimmune disease vaccines based on toll-like receptor (TLR) biology.
How to Buy Dynavax (NASDAQ: DVAX) Stock and Options
There are quite a few ways for investors to control a piece of Dynavax. The 2 simplest ways are to buy Dynavax stock directly or buy options on Dynavax stock to control shares of the company for a preset period of time.
In order to ensure a successful trade on Dynavax, you need to have good execution at all stages of the transaction. This begins by choosing a reputable and efficient broker to execute your buys and sells. Before you decide on an investment strategy, you must be sure that you are hooked to the market with a broker that will mirror your wishes so you avoid slippage and input error.
Let’s take a look at how to pick the right broker to buy and sell Dynavax stock and options contracts.
Pick a Brokerage
Dynavax’s inclusion on a major exchange, the NASDAQ, its increasing liquidity and its ability to stay above $5 per share means that most mainstream brokers will carry it with no extra trading commission.
This is good news for casual investors. Brokers that carry penny stocks or over-the-counter (OTC) stocks are often subject to additional regulations. They also place their own additional sets of rules on anyone who wants to trade those stocks. To its credit, Dynavax looks like it can maintain its place in the company it keeps right now. This means the following table of brokers will likely provide you an opportunity to trade Dynavax.
Now that you have chosen a broker to execute your trades, it’s time to decide your actual trading strategy. We will go over how to buy Dynavax options and stock below.
Choose Strike Price
In order to buy Dynavax options, you must decide on a strike price. (You can also sell options, but we will only talk about buying options here.)
First, decide whether you want to buy a call option or a put option. Call options rise in value as the Dynavax stock price rises. Put options rise in value as the Dynavax stock price falls.
The strike price on the call or put option is the price at which you want to call or put to execute. Let’s say you buy a Dynavax call option at a strike price of $15. If the price of Dynavax is at or above $15 on the day of expiration, then you will be obliged to buy 100 shares of Dynavax at $15 for every contract that you own. Keep in mind that you can sell your option before the expiration date and relieve yourself of the responsibility to exercise the contract.
You can find the various strike prices on the options contract chart in your broker under the ticker symbol DVAX. Dynavax contracts hold strike prices that are $1 apart from each other.
One options contract controls 100 shares of Dynavax stock. The advantage here is that 1 options contract is much less expensive than 100 shares of Dynavax. If the stock moves in the right direction for the option you purchase, you can produce a much higher ROI for your money than you could with a direct share purchase.
Choose Expiration Date
The expiration date on your Dynavax option is the last day that you will hold your option. It is also the day that your option will hold a time value of 0.
Dynavax has monthly options that expire on the 3rd Friday of the month. You can buy an options contract out all the way out to the 3rd Friday of January in the following year.
On the options buy screen for your broker, you will see a place to select your expiration date. Pick the date that you want and move on to the number of contracts that you will be purchasing.
Decide How Many Contracts
Because options are less expensive than the corresponding shares they control, many traders use options for leverage. On your execution screen, you will see a box to enter the number of contracts. Increase this number to the number of contracts you would like to buy. Keep in mind that the price of options tend to move more quickly than the price of the underlying stock. You can lose money very quickly depending on the strike price and the expiration date that you choose.
Watch Stock Price
Because of its recent notoriety in the coronavirus news cycle, Dynavax is often one of the premarket movers to watch. Depending on the broker that you choose, you can buy Dynavax stock in the premarket or when the market opens. Prices during premarket hours tend to be more volatile.
If you want to make a purchase, click “buy” in your broker’s user interface, enter the DVAX ticker symbol and the number of shares you want along with the price you are willing to pay. Creating a limit order is usually the best way to get the price you want.
Dynavax Stock History
Investors have noted that the growth of Dynavax was hidden because of its low trading volume. The new attention focused on biomedicine due to the coronavirus took care of that. Traders are also picking up on the improvements in the company’s bottom line and investing in future profitability.
Dynavax is still considered a penny stock, although it is looking to break out of that territory very soon. The most bullish Dynavax analysts predict a doubling of the stock price from its 52-week high of $7.20 per share. That would place the stock price firmly in the stocks under $20 lists for 2021, perhaps netting a new level of interest from investors who prefer more established growth-stage companies.
Pros to Buying Dynavax Stock
Here are just a few of the reasons that you may want to consider investing in Dynavax stock or options.
- The stock price is undervalued: For a substantial part of 2020, Dynavax was one of the best stocks under $5 to buy in biotech, with a 52-week low of $1.80. Savvy investors who got in at this price were rewarded with plenty of chances to cash out with exponential gains.
- New attention on the stock and industry: Exposure is good for the biotech industry, which relies on new investors to fund research and development interests. When new money comes into the industry, as it has during the coronavirus scare, it tends to affect all stocks in the sector positively.
- Well-positioned for profits: Smart money says that Dynavax is a well-managed company with a reputation for successful product initiatives.
Cons to Buying Dynavax Stock
Here we take a look at the potential downside of buying into Dynavax.
- A volatile industry: Investing in biotech is not for the faint of heart. Attention and funding can move out of the industry just as quickly as it moves in. The industry is not seasonal, either, so there is no way to predict when swings will occur.
- Not as established: For all of its accomplishments, Dynavax is a relatively young company. It may be squeezed out of certain sectors by more established competitors, locking it away from profits that it would have achieved if the market were more open.
- Regulation: Innovations are not always rewarded immediately in biotech. Drug trials, even for successful products, can have trouble passing muster with government regulators.
Playing with Dynamite
Dynavax is an exciting company that savvy investors are betting on for the long term. You must decide if you are willing to put up with short-term volatility to take part in future rewards. Of course, nothing is guaranteed, but many experts are saying that Dynavax is one of the best bets on biotech that you can make.
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